REDUCING THE MINIMUM DRAWDOWN RATES
Significant losses in financial markets as a result of the COVID-19 crisis are negatively affecting the account balance of some retirees’ superannuation pension or annuity.
To assist retirees, the Government has reduced the minimum annual payment required for account-based pensions and annuities, allocated pensions and annuities and market-linked pensions and annuities. The minimum annual payment you need to make to your members for the 2019-2020 and 2020-2021 financial years has been reduced by 50 per cent. You can find details at Minimum annual payments for super income streams on the Australian Taxation Office (ATO) website.
If you have paid the minimum drawdown amount, payments can be stopped for the remainder of the year. If you have paid more than the minimum drawdown amount, your member can recontribute these amounts if they are eligible to make superannuation contributions, subject to other rules or limits such as contributions caps.
EARLY RELEASE OF SUPERANNUATION
If a member of your SMSF is dealing with adverse economic effects of COVID-19, they may be able to access their super on compassionate grounds in certain circumstances.
From mid-April, eligible members can apply for a release of up to $10,000 of their super before 1 July 2020. They will also be able to access a further $10,000 from 1 July 2020 until 24 September 2020.
To apply for early release, your member must satisfy any one or more of the following requirements:
- They are unemployed.
- They are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance.
- On or after 1 January 2020, either
- they were made redundant.
- their working hours were reduced by 20% or more.
- if they are a sole trader, their business was suspended or there was a reduction in their turnover of 20% or more.
If your member is eligible, they can apply through myGov from mid-April. The ATO will then issue them with a determination advising of their eligibility to release an amount. When you receive the determination from the member, you will be authorised to make the payment.
TRUSTEE RESPONSIBILITIES FOR EARLY RELEASE OF SUPER
As an SMSF trustee, you are responsible for your and your members’ retirement savings. Please make sure you are eligible for early release of super before you release any funds from your SMSF.